Access to workers, and the skills of those workers, are two big differences between large cities in the UK, France and Germany.
Part one of this blog series comparing large UK cities to their European counterparts showed that the productivity of large UK cities lags well behind those on the continent. Why is this? In part two we look at more detailed data for large cities in France and Germany to identify the factors behind the UK’s lag.
The reason why UK cities‘ productivity lags is because of the types of businesses that the different UK and European cities have been able to attract. As Figure 1 shows, in large French and German cities high-skilled ‘exporting’ industries – which we know are the drivers of productivity growth – make up a much larger share of their economies than in big British cities.
The ten largest cities in Germany for instance are home to only 10 per cent of the population but around one quarter of Germany’s high-skilled exporting jobs. This is similar in France where six large cities account for around 7 per cent of the population but almost 14 per cent of such jobs. In the UK in contrast, nine large cities account for 16 per cent of both population and high-skilled exporting jobs.
Source: Bundesagentur fuer Arbeit, 2019; ONS, 2019; INSEE, 2018. Eurostat, 2017; ONS 2018.
Figure 2 looks at the industry composition of German, French and British cities from a slightly different perspective by differentiating between individual industries. It shows that even in Germany, which is often viewed as a ‘manufacturing nation’, high-skilled services are the driver of productivity in large cities. Frankfurt’s jobs share in high skilled services is around three times the one of Birmingham.
Source: Bundesagentur fuer Arbeit, 2019; ONS, 2019; INSEE, 2018. Eurostat, 2017; ONS 2018.
The question then is, what causes businesses to decide to locate where they do? Assessing the size of the benefits that the different cities offer to business can give some clues, namely: Do they offer a pool of skilled workers to hire from? Do they have a transport system that connects these workers to jobs? And is there available commercial space?
Data to compare the configuration and quality of commercial space isn’t readily available. But data on transport and skills is.
Preliminary analysis on transport data suggests that large British cities don’t compare too favourably to their European counterparts. The chart below looks at the number of people who can commute into the centre of each by public (horizontal axis) and private (vertical axis) transport, with the bubble size showing how large the city is in population terms.
It shows two things. The first is that many large British cities, such as Sheffield and Nottingham, have a small catchment within half an hour compared to their peers such as Stuttgart and Toulouse. So the effective pool of workers is smaller than for those on the continent. The second is that while Manchester and Birmingham perform much better on this measure, given their population size we should expect them to reach many more workers than they do.
However It is not clearcut that this is the cause simply of the transport system. What we also know is that large European cities are much more dense than their British counterparts, so there are more people living closer to their centres. We will explore these transport trends in more detail in the coming weeks in a separate briefing.
The clear challenge here for British cities to this the fact that they don’t attract the same large numbers of high skilled workers that comparably-sized cities in France and Germany do.
Source: Traveltime, 2021; ONS, 2018.
Note: Travel times are measured to the centre of each city for an arrival time at 9:00
It isn’t just the size of the pool that is a challenge, the skills of those potential workers are too. Figure 4, shows that access to skilled workers is a particular issue. Large UK cities have much higher shares of low-skilled people than cities in France and Germany. While in Germany, around 16 per cent of working-age residents in large cities have no or few skills and in France around 20 per cent, in large UK cities the figure is almost 40 per cent. This figure is also reflected by the share of people in cities with high skills. In large French cities, around 38 per cent of working-age people are high-skilled compared to 30 per cent in large UK cities. Figure 5 examines Munich and Manchester as an example. Because shares are so low, the high-skilled population living in Manchester is equivalent to Munich, despite Manchester having around one million more residents.
Source: Eurostat, 2011; Census, 2011.
Source: Eurostat, 2011 and 2017; Census, 2011; ONS, 2018.
The data above suggests that many large UK cities are not offering access to skilled workers to the same extent that similar sized French and German cities do, limiting the main economic benefit of big cities: agglomeration. Addressing this challenge will be a key part of the levelling up agenda, and our detailed recommendations, including increasing skills spending to that of Sweden, are set out in our latest briefing: So you want to level up?.
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Robin Spragg
Very interesting research, but I am not convinced some of the population statistics are accurate. The table of population of British cities seems to ba all over the place – Liverpool is not much smaller than Manchester, and Wigan is not the same size as Liverpool. When comparing city sizes it is necessary to ensure all are measured by the same methodology, especially when using commuting areas rather than administrative areas. My opinion on productivity is that it is primarily dependent on investment by both government and private corporations, and therefore in a country with one very dominant city such as London, no other city in that country can hope to attract as much high skilled employment unless there is very strong strategic planning of industrial and employment distribution. Liverpool lost most of its banking and commercial trade to London in the post-war period, and struggled to replace them because investment resources were strictly limited by central government.